Pestle Analysis

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12/3/2012

History of International Business
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Forces Behind Globalization
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Pre-industrial Trade around the world Strong manufacturing base of Europe & UK in early 1900 American dominance after WW-II Bretten Woods Monetary Agreement Japan Influence post 1970 Soviet weakness Developing nations stepping up exports Entry of China/India/Mexico/Brazil Worldwide Communication

Increase in and expansion of technology Liberalization of cross-border trade Development of services that support IB Growing consumer pressures Increased global competition Changing political situation Expanded cross-national cooperation

Criticisms of Globalization
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Why Companies Engage in IB
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Threats to National Sovereignty Skewed economic growth (pressure on natural resources) Growing income inequality Threat to cultural and social changes

To expand sales To acquire resources To minimize risk

Strategic Advantages of Trade


Global Strategy Alternatives
• Exporting

Exports:
   

Use of excess capacity Reduced production of costs per unit Greater profitability Spread of risk Cheaper supplies Additions to product line Reduction of risk of non-supply



Imports:
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– direct and indirect • Merchandise or Services • Licensing • Franchising • Joint Ventures • Direct Foreign Investment

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Global Economic Activity – 2011

Opportunities Offered by IB
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Country

GDP $billion

GDP(PPP) $billion

Population million

GDP Per capita $



Improved Standards of Living Higher profits Better Wages Ethics, Corporate Governance and Social Responsibilities Globalisation

US China Japan Germany France Brazil UK Italy Russia Canada India Spain

15094 7298 5869 3577 2776 2492 2417 2198 1850 1736 1676 1493

15094 11300 4440 3099 2217 2293 2260 1847 2383 1396 4457 1413

314 1347 127 82 65 192 62 61 143 35 1210 46

48070 5418 46212 43622 42707 12979 38983 36032 12937 49600 1385 32456

Global Economic Activity – 2011
Country GDP $billion Agriculture % Industry % Service %

Global Merchandise Trade – 2010
Country GDP $billion (2011) Export $billion Import $billion

US China Japan Germany France Brazil UK Italy Russia Canada India Spain

15094 7298 5869 3577 2776 2492 2417 2198 1850 1736 1676 1493

1.20 10.10 1.40 0.80 1.70 5.80 0.70 1.90 4.20 1.90 18.10 3.30

22.1 46.80 24.00 28.10 18.50 26.90 21.60 25.20 37.00 27.10 26.30 25.80

76.70 43.10 74.60 71.10 79.80 67.30 77.70 72.90 58.90 71.00 55.60 70.90

US China Japan Germany France Brazil UK Italy Russia Canada India Spain

15094 7298 5869 3577 2776 2492 2417 2198 1850 1736 1676 1493

1278 1578 770 1268 521 202 406 447 400 388 220 246

1969 1395 694 1067 605 106 560 484 249 402 327 314

India–Exports 2010:Product Category
$ billions
Category Agricultural Products Fuel and Mining Iron & Steel Other Chemicals Office & Telecom Eqpt. Ics & Electronic comp. Transport equipment Clothing & textiles Pharmaceuticals Others Total World 1362 3025 421 1243 1603 417 1695 602 461 4022 14851 India 25 53 7 23 2 9 18 23 6 88 254 % 1.80 1.70 1.70 1.80 0.10 2.10 1.10 3.80 1.30 2.20 1.70

India–Trade 2010-11 Product Category
$billions
Category Agricultural Products Textiles Gems & Jewelry Chemicals Engineering Goods Crude & Petroleum Gold & Silver Ores & Minerals Others Total Exports 24.70 23.31 40.79 28.98 68.78 41.92 0.00 10.66 15.26 254.40 Imports 8.72 3.09 31.26 35.63 71.63 106.07 35.61 24.90 35.66 352.57

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Services Trade 2010
Country United States UK Germany France Japan Italy China India Russia Mexico Brazil Export $ billion 518 227 232 143 126 97 170 123 44 15 30 Import $ billion 358 161 260 129 147 108 192 116 70 22 60

Difference between Domestic and International Business
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Physical (geographic) factors Societal factors Political policies Legal policies Behavioral factors Economic forces Competitive environment

Culture...
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